Rich/Poor Income Gap Widening To Chasm

(CBS) There have always been "haves" and "have-nots" in the United States, but over the past three decades, the gap between them has gotten a lot wider, statistics from congressional numbers crunchers show.

According to the non-partisan Congressional Budget Office, income for the bottom half of American households rose six percent since 1979 but, through 2005, the income of the top one percent skyrocketed - by 228 percent.

And, correspondent Benno Schmidt reported in The Early Show's "Early Wake-Up Call" Saturday, the impact of the growing disparity on the "have-nots," and even on small businesspeople, is being felt more and more.

Schmidt visited Adam Rames who, after 35 years, is saying goodbye to the only way of life he's known - his formerly thriving meatpacking business in New York City.

"I used to feed a lot of families," Rames told Schmidt. "I feel like I took care of the entire East Coast (with meat)!. I used to move 100,000 pounds a week. It's all gone."

Rames says he couldn't pay the rent when it tripled, couldn't pay pensions and retirement for the 15 workers he had to let go, couldn't keep up with gas and fuel prices, and couldn't afford supplies.

"In the past 16 months, I lost 40 percent of my business," he laments.

Now, he's headed for the unemployment line - and he's not alone.

This, while an upscale hotel goes up in his business' neighborhood.

Generations of working-class Americans came to that area of lower Manhattan to realize their dreams, Schmidt points out, and the meatpacking district is still thriving, but in a very different way.

Trendy boutiques hawk $7,000 jackets and $400 jeans made to look worn and old. Apartments trade for millions of dollars. Record oil profits and record Wall Street bonuses have driven out many who wonder where their tax breaks are.

A hard-hatted worker remarked to Schmidt that his money doesn't go very far in today's economy, and he lives paycheck-to-paycheck.

Many, Schmidt observes, can't understand the two economies: one for them, another for the super-wealthy or conglomerates.

Things are certainly "out of whack, out of balance for a lot of workers," New York Times reporter Steven Greenhouse, author of "The Big Squeeze: Tough Times for the American Worker," told Susan Koeppen on The Early Show Saturday.

"A lot of people think it's just them," he continued, "just you suffering from stagnant wages, but it's happening to millions of workers. It's happening for many reasons.

"One is globalization. Companies can move operations overseas, which helps them increase profits. Yet it also helps hold down wages for American workers. A second thing is there's pressure by Wall Street for companies to get their stock prices and their profits up, and that often causes them to push down wages.

"A third factor is that unions have become much weaker, and they don't have as much leverage on companies to increase those wages quickly. Another factor is health costs are soaring, and they're eating up part of the money that would normally go to wage increases."

"Many companies and investors on Wall Street," he explained, "want CEOs to maximize profits, maximize share prices, and that often translates into laying off people, downsizing, trying to reduce wages, trying to reduce benefits. So, unfortunately, too often the interests of Main Street and Wall Street are opposed."

About 70 percent of the economy is based on consumer spending, and that's presenting another problem, Greenhouse say: "What we're seeing now is gas prices soaring and debt levels soaring - a lot of Americans are not going out and buying so-called discretionary items like cars and flat-screen TVs, because people have to concentrate on buying food for their families and paying for health insurance and paying for utilities. So, right now, a lot of retail stores are hurting, and in turn, that's hurting a lot of American manufacturers.

"It's not unique to the United States because right now, worldwide, fuel prices are soaring. So, in Europe, in Japan, and the United States, consumers are feeling the squeeze. I think there's more inequality in the United States between the top and the bottom. It's not nearly as bad as in Europe, but I think the people on the bottom and even in the middle here in the United States are being squeezed worse than in many other countries."

What can be done about it?

Possible remedies, Greenhouse says, include enrolling more low income students in college, increasing pay for lower-wage union workers, and revitalizing the manufacturing base.

"A little-known secret is that, over the past seven years, the United States has lost one in five manufacturing jobs," he said. "Those are usually jobs that pay good wages, middle-class wages, usually provide middle-class benefits on health and pensions, and the United States seems not to be paying attention to this huge problem that has lost 3.5 million manufacturing jobs, and I think the government and industry have to work together to figure out how to preserve jobs."

To read an excerpt of "The Big Squeeze," click here.


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